Date: 19990525
Docket: 98-1063-UI, 98-169-CPP
BETWEEN:
CAMION HOLDINGS INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
ROWE, D.J.T.C.C.
[1]
On June 17, 1998, the Minister of National Revenue (the
"Minister") decided the employment of Brian Adams (the
worker) was insurable during the period from
January 1, 1996 to October 28, 1997 on the basis the
worker was employed under a contract of service and was,
therefore, an employee of Camion Holdings Inc. (the
"payor") pursuant to paragraphs 5(1)(a) of the
Employment Insurance Act and 3(1)(a) of the
Unemployment Insurance Act.
[2]
On June 17, 1998, the Minister decided the employment of Brian
Adams was pensionable employment pursuant to paragraph
6(1)(a) of the Canada Pension Plan during the
period from January 1, 1996 to October 28, 1997 on the basis he
was employed under a contract of service and was, therefore, an
employee of the payor. The appellant filed an appeal -
98-169(CPP) - from this decision and the parties agreed the
result in the within appeal would apply to it.
[3]
The appellant filed a book of exhibits, tabbed 1-7, inclusive, as
Exhibit A-1 and unless otherwise stated, a reference to a tab
number will relate to Exhibit A-1.
[4]
Hazel Wiens testified she is the Manager of Camion Holdings Inc.
(Camion) as well as being President and sole shareholder. The
business of Camion - operating from Dalmeny, Saskatchewan - is
owning trucks and equipment that it leases out to Tri-Line
Expressways Ltd. (Tri-Line), a transport company. Camion was
incorporated in 1986 and owns 10 trucks. During the period before
August 1, 1995, Camion hired drivers for these trucks
and also controlled dispatching of the trucks to pick up and
deliver freight. Subsequent to January 1, 1998, Camion
hired drivers and had them on the payroll as employees. However,
during the period under appeal, Camion operated on the basis that
its drivers, while operating Camion trucks leased to Tri-Line,
were independent contractors pursuant to a sub-contract. Ms.
Wiens stated Camion locates drivers for its trucks by advertising
through agencies, placing notices at truck stops or by
word-of-mouth referrals from Tri-Line. She stated Tri-Line
requires drivers to have a clean abstract, no criminal record,
several years driving experience including operating with
particular types of trailers. In her opinion, Tri-Line was very
strict, accepted only 1 out of 10 applicants and sometimes
rejected persons Camion would have hired. In the event a
qualified driver cannot be located to operate a Camion tractor
unit to haul loads for Tri-Line, then it will be forced to sit
idle. Tri-Line carried the insurance on Camion trucks and
required drivers with clean abstracts, good driving experience
and lack of criminal record in order to enter into the United
States. On occasion, Tri-Line has refused to permit a particular
driver to operate a truck while carrying out Camion's
obligations under the contract. Ms. Wiens referred to a
document entitled Incident Report - Tab 3 - issued by
Tri-Line relating to the worker, Brian Adams, concerning
the failure of Adams to inform Tri-Line he had received two
speeding tickets. The notation on the document indicated Adams
had been issued a "verbal warning only and was reminded of
company policies", was informed future incidents would be
dealt with by the Terminal Manager and had been advised the
infraction would be posted in his file for future reference. Ms.
Wiens stated, later on, Tri-Line advised it would not dispatch a
Camion truck if Adams were the driver and, in response, Camion
moved Adams to another company and used his services there as a
spare driver. Since Camion did not perform any licensing or
reference checks in relation to applicants for a driving job,
Tri-Line undertook those tasks and, on one occasion, discovered a
driver - using an Alberta operator's license - had committed
various infractions in Saskatchewan which had been recorded on
his Saskatchewan operator's license. Tri-Line offered a
two-day training course but drivers paid their own expenses
incidental to attending. Each Camion driver was responsible for
looking after the equipment, loading and off-loading, if
required, and checking for tie-downs and proper tarping of loads.
There was no dress requirement while operating a Camion truck for
Tri-Line. The drivers had to have a Class 1 license, clean
abstract, deck experience, pass a medical examination carried out
by physicians retained by Tri-Line, be qualified to carry
dangerous goods and were required to participate in a drug and
alcohol compliance program involving random testing paid for by
Tri-Line. The relationship between Camion and Tri-Line was
established by contract and, thereafter, Tri-Line dispatched a
driver directly to take a load to a particular destination. A
driver had the right to refuse a load and in this event Tri-line
hired another truck to make that trip. There are 12 Tri-Line
terminals in Canada and the United States and a driver will
contact a terminal to see if a load is available to be hauled to
a destination. A driver will also contact a terminal in order to
advise he was going to be out-of-service for a certain period and
would be unavailable to have a load assigned to him. Camion could
contact a driver by requesting a Tri-Line terminal communicate
with a particular truck through the Tri-Line satellite
communications system. It was the responsibility of a driver to
complete the log and Tri-Line would not re-assign a driver to
haul a load unless he was within the limits prescribed by the
applicable law in that particular jurisdiction. A driver of a
Camion truck hauling loads dispatched by Tri-Line might not be in
contact with the Camion office for a month. There were no set
working hours for the drivers. Referring specifically to the
worker, Brian Adams, Ms. Wiens stated that after December 1,
1997, as a result of Tri-Line refusing to allow Adams to continue
hauling loads dispatched by Tri-Line, Camion paid wages to Adams
and he continued to operate the same truck hauling goods for
another company which had entered into a lease with Camion. She
referred to the contract dated March 4, 1996 between
Brian Adams and Camion - Tab 2 - in which Adams agreed to be an
independent contractor while operating a Camion truck. Pursuant
to a separate contract between Camion and Tri-Line, Ms. Wiens
stated although Tri-Line obtained the necessary licenses
for the trucks, Camion ultimately paid the cost. The Camion
trucks had to have a safety inspection each month and Camion paid
the fee for that service together with the cost of vehicle
insurance. Any costs relating to obtaining and maintaining
operator's licenses were borne by the individual drivers.
Tri-Line, by the 20th of the month following delivery of the
service, issued a statement to Camion - an example of which is at
Tab 4 - relating to a truck operated by Brian Adams. The document
entitled Contract Revenue Report - with attached print-outs - was
prepared by Tri-Line and set forth a myriad of details concerning
the activity of that particular truck during the reporting period
including the miles covered and referred to the split in gross
revenue between Tri-Line and Camion. Ms. Wiens explained
the driver - Brian Adams - was then paid by Camion in accordance
with a sliding scale and certain deductions, such as union dues -
which had been paid initially by Tri-Line - and cash advances
obtained by Adams using Tri-Line's checking system would also
be subtracted from his final payment. At Tab 5, is an example of
a payment statement. Camion used a bonus system which was
composed of a combination of factors including payment per mile
driven and additional compensation in recognition of efficient
fuel consumption, proper maintenance and accident-free driving in
the sense of not incurring any property damage attributable to
driver error. In the example provided at Tab 4, the drivers - a
husband and wife team - obtained 95% overall of a possible bonus
payment which was based on 1% of the gross revenue of the truck
being driven by them. On the fifteenth day of each month, Camion
deposited the sum of $800.00 into a driver's bank account
which he could then access using a transaction card. Different
types of loads earned varying revenues and, in her view, a driver
could earn up to 20% more per month by choosing particular loads,
by loading and unloading his own truck and managing time
efficiently by utilizing daylight hours to haul over-dimension
loads or calling ahead to the appropriate Tri-Line Terminal
to arrange for another load, thereby eliminating downtime. At Tab
6 - a statement issued by Camion to Larry and Connie Miles -
indicated a bonus of $264.00 had been paid to them as a result of
having hauled - pursuant to a dispatch from Tri-Line - a rush
load which earned Camion a $400.00 bonus. Camion, in its
discretion, passed on two-thirds of that amount to the Miles.
Camion paid for licensing, fuel, maintenance, vehicle insurance
and all other operating expenses of the truck while the drivers
had to pay their own meals, lodging, union dues, group insurance
and any loss or damage to loads if due to their error or omission
together with any amounts due arising from any personal driving
infractions. The drivers provided their own bedding, coolers,
television sets, microwave ovens, calculators, briefcases,
overalls, safety hat with vest, and hand tools. Tri-Line paid,
initially, for Workers Compensation Board coverage for the Camion
drivers but was re-paid by deducting the payment from
Camion's gross revenue for a certain period. Tri-Line also
advanced drivers a maximum of $50.00 per day through an internal
checking system but any monies so advanced were then deducted by
Tri-Line from the share of revenue flowing to Camion and Camion -
in turn - deducted such amounts from payment to the drivers.
Camion had entered into a contract dated August 29, 1995 with
Tri-Line - Tab 1 - in which Camion agreed to haul cargo,
exclusively, for Tri-Line. Since Tri-Line had a labour contract
with a union, Camion - at paragraph 11 of the contract with
Tri-Line - agreed it would ensure all of its drivers would become
- and remain - members of the union (or unions) which would be
parties to a collective agreement with Tri-Line. Camion also had
to agree to bear the cost of group insurance for the drivers and
it then deducted the amount of the premiums from a driver's
revenue when payment was made in accordance with the monthly
statement. At Tab 2 - the contract between Camion and Brian Adams
- Schedule A - there was reference to payment of revenue earned,
performance bonuses and method of payment. Under the latter
category, Adams agreed Camion would hold back 20% of the revenue
otherwise payable to him which would be placed into an
interest-bearing account - with interest accruing to his benefit
- and the monies would not be released until Adams had prepared
all necessary tax returns for the relevant fiscal year. Even
then, the amount held back would be released in the form of
payment to Revenue Canada to satisfy tax liabilities of Adams and
only after deducting any amounts due to Camion for various
reasons - arising under the contract - would any remaining funds
be returned to Adams. Ms. Wiens stated this particular clause had
been requested by a driver earlier on and, thereafter, Camion
decided to incorporate it into all subsequent contracts with
drivers. The drivers had the right to hire properly qualified
drivers to operate the truck for them - paragraph 6.02 of the
contract - Tab 2 - and bore risk arising from
potential damage to cargo as stated in paragraph 7.01. The
drivers would be offered a route by Tri-Line to a particular
destination but were free to chose their own. Camion had entered
into 10 separate contracts with drivers, each of whom operated
one truck owned by Camion.
[5]
In cross-examination, Ms. Wiens stated that while the decision
issued by the Minister specifically related to Brian Adams, the
working relationship between Camion and the other drivers was
basically the same. Adams is no longer employed by Camion. Ms.
Wiens identified a contract - Exhibit R-1 - between Camion and
Tri-Line which covered operation of the truck driven by
Brian Adams and the description of that particular unit is set
forth in Schedule A to the said contract. Camion would not enter
into a contract with a particular driver unless and until
Tri-Line had advised that the individual was acceptable to
haul loads dispatched by Tri-Line. On occasion, Camion agreed to
put a driver behind the wheel of one of its trucks, even though
that person was not known to Camion management, on the basis
Tri-Line had approved that individual as a qualified driver.
Tri-Line did not care who operated a particular unit provided the
driver was properly qualified and approved in accordance with
Tri-Line standards and company policy. At paragraph 6 of the
contract, Camion had agreed its servants, agents or employees
would abide by and be subject to all rules and regulations of
Tri-Line. Ms. Wiens agreed there was no separate contract between
Brian Adams and Tri-Line. At paragraph 10, Camion agreed it would
make reports to Tri-Line on such matters as Tri-Line might
request from time to time. Although mentioned in her evidence
during examination-in-chief, Ms. Wiens - in response to a
question from counsel for the respondent - re-iterated Camion had
promised Tri-Line each Camion driver would become a member of the
appropriate union, as required by any collective agreement in
place, but she did not know details of any dealings or agreements
between Tri-Line and any bargaining unit. At paragraph 16, Camion
agreed to bear the premium cost of a health and welfare plan
covering a Camion employee who would be operating the truck
listed in Schedule A. Ms. Wiens conceded there was no clause in
the contract between Camion and Tri-Line which seemed to ever
contemplate any Camion driver having any status other than
employee, servant or agent. Referring to the specific contract
with Brian Adams - Tab 2 - Ms. Wiens stated it was an
agreement whereby Adams agreed to manage a specific piece of
equipment, that is, the truck driven by him. At paragraph
1:00(b), Adams had agreed to make his services available to
Camion, as required, within two hours after receiving notice to
that effect, but Ms. Wiens stated, in practice, this clause was
not utilized because Tri-Line dispatched the drivers. In her
opinion, the other clauses in the contract were followed, as
written. In 1995, Camion made the decision to forego dealing
directly with its customers and this led to leasing out company
trucks to Tri-Line. She agreed Camion had the ultimate
responsibility in deciding who would - or could - drive company
trucks. Many drivers, including Brian Adams, had worked for
Camion prior to 1995 and had done so with the status of employee.
As such, drivers had been issued T4 slips and the appropriate
deductions had been made from their pay. Even during this period,
Camion still leased trucks to another entity - IDW Trucking Ltd.
- of which she was a director and her husband was the major
shareholder. Trucks formerly owned by that corporation were then
sold to Camion. In the 1996 financial statement of Camion, there
is reference to the sum of $369,000 having been paid out in
salaries but Ms. Wiens stated this is incorrectly labelled
and the amount was actually the total of payments made to
sub-contractors. At paragraph 5.00 of the agreement at Tab 2, the
contractor (Adams) was to employ one driver to operate the
specific tractor-unit and the other contracts contained the same
provision but Larry and Connie Miles requested Camion deposit
funds - owing to the driver - into a joint account and Camion
agreed to do so. Ms. Wiens identified various contract revenue
reports - Exhibit R-2 - relating to Brian Adams as
well as payment records - Exhibit R-3 - covering the period
commencing in January, 1996 and continuing through December,
1997. Ms. Wiens stated the holdback clause in the agreements with
the drivers requiring the 20% holdback for income tax liabilities
was part of the contract and if someone wanted to drive a truck
for Camion he or she accepted that clause. The mechanism by which
drivers obtained money to pay tolls and other small payments or
for personal use was part of the money system set up by
Tri-Line. On occasion, drivers would obtain loans and these
would be deducted from the amount owing to the driver at the end
of the month. In the event there was a negative balance, in the
sense the driver ended up owing Camion money, then that would be
carried forward to the next month. Drivers were reimbursed for
any tolls, fees, fares, etc. paid by them during their trips. All
Camion trucks (tractors) carried Tri-Line insignia and the
trailers were provided by Tri-Line. Adams did not drive for any
company other than Camion but, under his contract with Camion,
could have done so during the relevant period.
[6]
Counsel for the appellant agreed Tri-Line was not the employer of
the worker, Adams, but neither was Camion. Instead, Adams was a
truck driver in business on his own account having a chance of
profit and risk of loss in accordance with the terms of his
contract. Camion had no control over the generation of revenue
and Tri-Line paid additional money for certain loads under
varying conditions and a substitute driver could have been hired
by Adams to operate the truck provided this person was qualified
in accordance with Tri-Line standards. The evidence, in
counsel's submission, pointed to an absence of control being
exercised by Camion and the agreement with the driver could not
be terminated except upon giving 30 days written notice.
[7]
Counsel for the respondent submitted the business was clearly
that of Camion who had chosen to enter into a contract with
Tri-Line and to have given it the right to exercise certain
control over Camion drivers. There was no significant opportunity
for profit or risk of loss and on balance it was apparent the
worker - Adams - was an employee pursuant to a
contract of service and the decision of the respondent was
correct.
[8]
In Wiebe Door Services Ltd. v. M.N.R., 87 DTC 5025, the
Federal Court of Appeal approved subjecting the evidence to the
following tests, with the admonition that the tests be regarded
as a four-in-one test with emphasis on the combined force of the
whole scheme of operations. The tests are:
1. The Control Test
2. Ownership of Tools
3. Chance of Profit or Risk of Loss
4. The Integration Test
[9]
In the within appeal, Camion - pursuant to the contract with
Tri-Line - agreed Camion servants, agents
or employees would abide by and be subject to all rules and
regulations of Tri-Line. Similarly, Camion also agreed
Tri-Line would have the right to dispatch certain loads and
deal directly with Camion drivers regarding various aspects of
the cargo-hauling business. In the specific instance of Brian
Adams, Camion, at the request of Tri-Line exercising its
perceived right under the contract with Camion, insisted Adams no
longer operate the Camion truck while hauling under the auspices
of Tri-Line. Camion took Adams off the Tri-Line runs and - using
the same truck - assigned him to haul loads as dispatched by
another freight carrier. If an employer loans out an employee to
another person or entity or - in fancier terms - pursuant to a
secondment, permits the worker to perform services for another
and agrees day-to-day management of that person can be undertaken
by the recipient of the service, that, without a whole lot more,
does not mean the employer is still not exercising control. In
the within appeal, Camion agreed with Tri-Line that Camion
employees would belong to a union and would be covered by
Worker's Compensation Board legislation. The dues and
premiums relating to these matters were later paid for by Adams
and the other drivers when Camion issued payment for services and
the amounts were shown as deductions on the statement. Apart from
the reasonable assumption that union membership - with health and
welfare benefits flowing therefrom - and coverage by provincial
compensation legislation is applicable to an employee as opposed
to an independent contractor, it would be an odd working
relationship to see one entity forcing another to obtain certain
insurance coverage or to join specific organizations which merely
provided a benefit to the worker rather than being an integral
part of getting the job done.
[10] With
regard to ownership of tools, the truck was owned by Camion. The
other small items that may have been owned by some drivers -
perhaps, also by Brian Adams - were largely for the personal
comfort and convenience of the drivers while on the road for long
periods of time and were not reasonably connected to the
production of revenue which was derived by driving the Camion
truck from point A to point B with a load hauled on - or in
- a trailer owned by Tri-Line.
[11] The
evidence of Ms. Wiens indicated there was an opportunity for a
driver to have some impact on revenue earned in the sense a
different high-paying load could be hauled by accepting a
particular dispatch from a Tri-Line terminal or by using
efficient time-management techniques but the difference, in
reality, would be very slight overall. There was nothing in the
evidence to substantiate the statement by Ms. Wiens that a driver
could influence revenue up to 20% of the total. Furthermore, the
payment of bonuses was, to a large extent, dependent on the
exercise of discretion by Camion management according to certain
criteria unilaterally set by the company from time to time. A
perusal of the payment record for Brian Adams - Exhibit R-3-
covering the period from January, 1996 through December, 1997
does not reveal even one payment of any type of bonus or extra
revenue-sharing due to Adams having increased the revenue stream
from Tri-Line by having exercised his right to accept
higher-paying loads. Notwithstanding certain clauses in the
contract between Camion and Adams - Tab 2 - purporting to deal
with the issue of risk, Camion carried full insurance and there
was no real impediment to the security of the income generated by
the driver who was paid according to the number of miles
travelled and revenue produced. Further, in paragraph 19 of the
contract between Camion and Tri-Line - Tab 1 - Camion gave
Tri-Line the right to settle claims from third parties up to a
maximum of $2,500 without the consent of Camion and any amount
paid would be deducted from Camion's share of the revenue
produced. It would be a peculiar proposition - in law - if Camion
were to proceed to deduct that same amount from a driver's
revenue when that individual was not privy to the contract with
Tri-Line.
[12] As for
the integration test, in the case of David T. McDonald Co.
Ltd. v. M.N.R., 92 DTC 1917, Mogan, T.C.C.J. was considering
whether an individual was an employee of a corporation or if his
relationship was that of an independent contractor. At page 1922,
the Honourable Judge Mogan stated:
"In Wiebe Door, MacGuigan, J. cited with approval at
page 5030 the Market Investigations case in which the
question is asked: "Is the person who has engaged himself to
perform these services performing them as a person in business on
his own account?" To answer that question, one must consider
whether the person has the capacity to engage in the particular
business on his own account. If he has experience, knowledge and
goodwill in the business, it is easier to conclude that he has
the capacity to engage in the business on his own account and
that he is not simply an incorporated employee. This is
particularly true when the person has no prior employment
connection with the party who benefits from his services. But if
he has no experience, knowledge or goodwill in the business and
offers only personal skills not related to the business, it is
more difficult to conclude that he has the capacity to engage in
the business on his own account; and it would probably be more
reasonable to regard him as an employee of the party who benefits
from his services."
[13] In the
within appeal, Brian Adams worked for Camion, prior to 1995, on
the basis of being an employee, subject to the usual payroll
deductions, and there was little or no change in his function
when he provided the same services to Camion under the contract.
There had been no prior business relationship between Adams and
Tri-Line, a party also benefiting from his services, and the
licensing, business relationship and overall structure belonged
to Camion and it was Camion's contractual relationship with
Tri-Line which permitted revenue to be produced. Adams'
function was to drive the truck. To hold that he was somehow an
entrepreneur engaged in managing a piece of equipment - a tractor
unit - licensed and owned by Camion, hauling a trailer owned by
Tri-Line, carrying loads dispatched by Tri-Line, and being paid
by Camion at a rate based on mileage covered with the
expectation, perhaps, of receiving a bonus dependent on Camion
discretion, would run contrary to the weight of the jurisprudence
which requires that, for this test, there be some relevant and
significant indicia of entrepreneurial status. The evidence does
not disclose Brian Adams' working relationship with Camion to
exhibit, on his part, any characteristics of a truly distinct
existence in structure or function ordinarily attributable to an
independent contractor. The requirement that 20% of revenue be
held back from Adams and the other drivers, in order to satisfy
income tax liabilities, indicates Camion was not sure of the
purported status of independent contractor it was trying to
establish by contract with the drivers and wanted to have some
money on hand in the event a determination - at some future date
- of the drivers' status, as employees, might create a
problem because Camion had not made the deductions for income tax
required to be made by an employer pursuant to the Income Tax
Act. There was an obvious lack of bargaining power in the
hands of the drivers who had to abide by that clause in a
contract or forego driving a Camion truck. One test of a working
relationship is how one or other - or both - of the parties hold
themselves out to a third party directly or indirectly involved
in the overall scheme of the revenue-producing activity. It is
obvious Tri-Line, under its contract with Camion, had no reason
to anticipate the Camion drivers would be working in any
capacity, whatsoever, other than as employees of Camion and the
consistent wording of the relevant contract bears that out.
Certainly, Tri-Line was not bargaining with Camion on the basis
the obligations arising out of the contract would be fulfilled by
Camion entering into a series of contracts with various drivers
on the basis of them being sub-contractors. Instead, Camion
agreed its obligations would be fulfilled by people who were
subject to its direction and control by virtue of being
employees, servants or agents.
[14] What the
parties thought their relationship was will not change the facts.
In the case of The Minister of National Revenue v. Emily
Standing, 147 N.R. 238, Stone J.A. at pp. 239-240 stated:
"There is no foundation in the case law for the
proposition that such a relationship may exist merely because the
parties choose to describe it to be so regardless of the
surrounding circumstances when weighed in the light of the
Wiebe Door test."
[15] In the
case of F.G. Lister Transportation Inc. v. M.N.R.,
96-2163(UI), unreported, dated June 23, 1998, I dealt with the
case of long-haul truck drivers and found they were employees
working pursuant to a contract of service. Because most of these
cases can turn on an apparent slight difference in facts, in the
Lister decision, at paragraph 13, I commented as
follows:
"I now find myself in the position of being required to
point out the differences in the facts in the within appeal and
those in two other decisions issued by me in which I held the
drivers were independent contractors. In the case of Lee
(c.o.b. D & A Transport) v. M.N.R. [1995] T.C.J. No.
426 I held the driver of a long-haul transport truck to
have been an independent contractor. In that case, the driver had
registered his business for purposes of the Goods and Services
Tax, maintained a business bank account and had filed income tax
returns on the basis of being self-employed. In Lee, the
appellant had earlier been an employee of the payor and had
agreed to alter the working relationship and there was clear
evidence he could have hired another driver to work for him on
long-hauls thereby generating a profit. As well, in Lee,
it came down to choosing between two versions of circumstances
surrounding a working relationship and the choice did not favour
the worker. I also held the tools of the trade were the personal
skills of the driver as a qualified person capable of hauling a
loaded trailer over long distances. That finding was in the
context of the driver operating a business under the trade name,
Rick's Driving Services, having a bank account under that
name and otherwise doing business with third parties on that
basis. Income tax returns had been filed on the basis the worker
was a self-employed person.
In another decision of mine, Metro Towing Ltd. v. M.N.R.
[1991] T.C.J. No. 717, I found a tow-truck driver to have been an
independent contractor. In that case, while there was a high
degree of control over the worker, he had leased the vehicle and
all of the equipment needed to carry out his task and bore
all of the costs, including insurance, relating thereto. That
driver also had a substantial risk of loss arising from the
operation of that vehicle in the event he was not able to
generate sufficient gross revenues which fluctuated on a monthly
basis, as did, to a lesser extent, his costs of operation. In
that case, like Lee, supra, the worker had earlier
been on the regular payroll and had decided to enter into a new
arrangement whereby he was the lessor of a truck and certain
equipment and would be entitled to receive 30% of gross towing
revenue arising from jobs which were dispatched by Metro Towing
Ltd. The evidence in the Metro Towing Ltd. appeal
disclosed that other tow-truck drivers operated through a limited
company or a partnership arrangement.
In the case of Summit Gourmet Foods Inc. v. M.N.R.
97-470(UI), a decision of The Honourable Judge Mogan,
T.C.C., dated November 24, 1997, Judge Mogan considered the
status of a person - Freeman Walters, the intervenor - who drove
a truck for the appellant, a corporation carrying on business as
a supplier to pizza restaurants. Judge Mogan held the driver to
have been an employee engaged in insurable employment and, at
page 5 and following, stated:
"On control, I regard that test as marginally favouring
employment and not independent contractor even though counsel for
the Appellant stressed that Freeman was not told the way to do
his work. I accept that. On the other hand, he was assigned
trips; he could arrange the order of delivery and the date but
they had to be delivered within a week, and he had to call in to
the Appellant's office each morning. This was brought out
in Freeman's testimony. He said: "Every person
operating a truck has to report in, and I specifically did. I had
to call in every morning to say where I was going so that they
would know where I would be that day, and whether there were
additional orders that had come in from customers which I might
have to fill out of the extra product I was carrying".
There was an opportunity for the Appellant to call evidence in
reply to contradict that bald statement by Freeman but it failed
to do so. On a common sense basis, I believe the statement.
Eric described a freezer truck which Freeman used costing
between $70,000 and $80,000. When a company sends a person out in
its truck of that value, it wants to know not only where the
truck is day-by-day but also, when there are established
customers to be serviced, it wants to know in a timely manner
whether the customers are being serviced because they are the
lifeline of a business. I cannot believe that a person in
Freeman's position would not be required to report in daily
on where he went and what he had serviced and whether there were
fresh orders.
The fact that Freeman could arrange the order in which he
would service these customers, or that he could arrange the time
when he started on a trip does give him some freedom from control
but, on balance, I would say that although he was not under the
hand of the Appellant, they knew on a daily basis where he was,
what he was doing and what customers he had serviced. Therefore,
on the test of control, I find that there is more of an
indication of the type of control one finds in employment than
the simple direction which is given to an independent
contractor.
With regard to the test of ownership of tools, it is very
strongly in favour of employment and not an independent
contractor. The only relevant tools for this kind of work were
the truck and the dolly, both of which were owned by the
Appellant. Counsel for the Appellant brought to my attention a
similar case in Saskatchewan, where Mr. Justice Kyle of the Court
of Queen's Bench said:
...To draw a parallel between the ownership of tools in the
case of a tradesman and the hotel and equipment therein in a case
such as this appears to be stretching the logic of the
Montreal Locomotive case beyond reason.
I would agree with that statement. I think that an $80,000
truck was never in the minds of those learned Judges half a
century ago who laid down these early tests and talked about
ownership of tools. In my view, they were talking about
tradesmen's tools like a carpenter's hammer and saw.
The fact is, however, that in a more sophisticated society, this
truck was the only vehicle through which the service was
performed. The driver's licence that was held by Freeman
was a pre-qualification to his engagement with the Appellant; and
he could not be engaged if he did not have a driver's
licence. I do not regard his driver's licence as a tool. I
look at the only thing that Freeman used to perform the services
and it was a very expensive and sophisticated piece of equipment.
Therefore, the test of ownership of tools favours employment.
On the chance of profit and risk of loss, I find that also
favours employment because there was virtually no risk of loss.
There was a chance of compensation because all Freeman had to do
was complete the round trip and he would receive the amount that
had been settled between himself and the Appellant in Exhibit
A-1. Compensation in this context is not profit. Counsel for the
Appellant argued that it was possible for Freeman to incur a loss
because, on the surplus product that he carried, he could say:
"I will buy some of that and resell it for profit on my
own". If he had committed to that kind of arrangement, he
could buy the product at the point of departure on the trip; let
us say 10 cases of completed pizza, and take a chance on selling
them either on this trip, and make money by the trading in pizza
product. That opportunity may have been available to him, but I
draw the inference that the extra product was not there just for
the trading and commercial activities of the driver. It was also
there as backup product for the needs of established customers
who might, in the course of the trip, decide that they needed
more than the order destined for them at the time of departure of
the truck."
[16] The
foregoing observations and reference to the Summit Gourmet
Foods, supra, case are relevant to the within appeal.
[17] The
appellant has not demonstrated the decision of the Minister to
have been incorrect and, therefore, it is confirmed. As a result,
this appeal is dismissed. In accordance with the mechanism agreed
to by the parties at the outset, appeal 98-169(CPP) is
also dismissed.
Signed at Sidney, British Columbia, this 28th day of May
l999.
"D.W. Rowe"
D.J.T.C.C.
COURT FILE
NO.:
98-1063(UI)
STYLE OF
CAUSE:
Camion Holdings Inc. v. M.N.R.
PLACE OF
HEARING:
Saskatoon, Saskatchewan
DATE OF
HEARING:
March 5, 1999
REASONS FOR JUDGMENT BY: the
Honourable Deputy Judge D.W. Rowe
DATE OF
JUDGMENT:
May 28, l999
APPEARANCES:
Counsel for the Appellant: Kerry M. O'Shea
Counsel for the
Respondent:
Elaine Lee
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, CanadaCOURT FILE
NO.:
98-169(CPP)
STYLE OF
CAUSE:
Camion Holdings Inc. v. M.N.R.
PLACE OF
HEARING:
Saskatoon, Saskatchewan
DATE OF
HEARING:
March 5, 1999
REASONS FOR JUDGMENT BY: the
Honourable Deputy Judge D.W. Rowe
DATE OF
JUDGMENT:
May 29, 1999
APPEARANCES:
Counsel for the Appellant: Kerry M. O'Shea
Counsel for the
Respondent:
Elaine Lee
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
98-1063(UI)
BETWEEN:
CAMION HOLDINGS INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeal
of Camion Holdings Inc. (98-169(CPP)), on March 5,
1999, at Saskatoon, Saskatchewan, by
the Honourable Deputy Judge D.W. Rowe
Appearances
Counsel for the
Appellant:
Kerry M. O'Shea
Counsel for the
Respondent:
Elaine Lee
JUDGMENT
The
appeal is dismissed and the decision of the Minister is confirmed
in accordance with the attached Reasons for Judgment.
Signed at Sidney, British Columbia, this 28th day of May
l999.
D.J.T.C.C.
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